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Article by DailyStocks_admin    (06-29-08 03:17 PM)

World Fuel Services Corp. CEO PAUL H STEBBINS bought 25000 shares on 6-25-2008 at $21.45

BUSINESS OVERVIEW

Overview

World Fuel Services Corporation (the “Company”) was incorporated in Florida in July 1984 and along with its consolidated subsidiaries is referred to collectively in this Annual Report on Form 10-K (“Form 10-K”) as “World Fuel,” “we,” “our” and “us.” We commenced business as a recycler and reseller of fuel. We have since ceased the activities of a recycler. In 1986, we diversified our operations by entering the aviation fuel services business. In 1995, we entered the marine fuel services business by acquiring the Trans-Tec group of companies. In 2003, we entered the land fuel services business.

We are engaged in the marketing and sale of marine, aviation and land fuel products and related services on a worldwide basis. In our marine segment, we offer fuel and related services to a broad base of maritime customers, including international container and tanker fleets and time-charter operators, as well as to the United States and foreign governments. In our aviation segment, we offer fuel and related services to major commercial airlines, second and third-tier airlines, cargo carriers, regional and low cost carriers, corporate fleets, fractional operators, private aircraft, military fleets and to the United States and foreign governments. In December 2007, we acquired Kropp Holdings, Inc., which we refer to as AVCARD, the brand name under which it does business. AVCARD offers a private label charge card and sells aviation fuel and related services to the general aviation industry. In our land segment, we offer fuel and related services to petroleum distributors operating in the land transportation market. We compete by providing our customers value-added benefits including single-supplier convenience, competitive pricing, the availability of trade credit, price risk management, logistical support, fuel quality control and fuel procurement outsourcing.

We have offices located in the United States, United Kingdom, Denmark, Norway, the Netherlands, Germany, Greece, Turkey, the United Arab Emirates, Russia, Taiwan, South Korea, Singapore, Japan, Hong Kong, Costa Rica, Brazil, Chile, Argentina, Mexico, Colombia, Canada and South Africa. See “Item 2—Properties” for a list of principal offices by business segment and “Exhibit 21.1—Subsidiaries of the Registrant” included in this Form 10-K for a list of our subsidiaries.

Financial information with respect to our business segments (marine, aviation and land) and the geographic areas of our business is provided in Note 10 to the accompanying consolidated financial statements included in this Form 10-K.

Our principal executive offices are located at 9800 Northwest 41st Street, Suite 400, Miami, Florida 33178 and our telephone number at this address is (305) 428-8000. Our internet address is www.wfscorp.com and the investor relations section of our website is located at http://ir.wfscorp.com . We make available free of charge, on or through the investor relations section of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) with the Securities and Exchange Commission (“SEC”) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Also posted on our website are our Code of Corporate Conduct and Ethics, Board of Directors’ committee charters, and Corporate Governance Principles. If we make any substantive amendments to our Code of Corporate Conduct and Ethics (the “Code”) or grant any waiver, including any implicit waiver, from a provision of the Code to our Chief Executive Officer, Chief Financial Officer or Corporate Controller, we will disclose the date and nature of such amendment or waiver on our internet website, in a periodic filing under the Exchange Act or in a report on Form 8-K. Our internet website and information contained on our internet website are not part of this Form 10-K and are not incorporated by reference in this Form 10-K.

Marine Segment

We market fuel and related services to a broad base of customers, including international container and tanker fleets, and time-charter operators, as well as to the United States and foreign governments. We provide marine fuel and related services throughout most of the world under the following trade names: World Fuel, Trans-Tec, Bunkerfuels, Oil Shipping, Marine Energy, Norse Bunker, Casa Petro and Tramp Oil.

Through our extensive network of offices, we provide our customers global market intelligence and rapid access to quality and competitively priced marine fuel, 24 hours a day, every day of the year. Our marine fuel related services include management services for the procurement of fuel, cost control through the use of price hedging instruments, quality control and claims management. Our customers need cost effective and professional fuel services, since the cost of fuel is a major component of a vessel’s operating overhead.

As ship owners, time charter operators and suppliers continue to outsource their marine fuel purchasing and/or marketing needs, our value added services have become an integral part of the oil and transportation industries’ push to shed non-core functions and reduce costs. Suppliers use our global sales, marketing and financial infrastructure to sell a spot or ratable volume of product to a diverse, international purchasing community. End customers use our real time analysis of the availability, quality, and price of marine fuels in ports worldwide to maximize their competitive position.

In our marine segment, we primarily act as a reseller. When acting as a reseller, we contemporaneously purchase fuel from a supplier, mark it up, and resell the fuel to a customer, normally taking delivery for purchased fuel at the same place and time as we make delivery for fuel sold. We extend unsecured credit to most of our customers. We also act as a broker. When acting as a broker, we negotiate the transaction by arranging the fuel purchase contract between the supplier and the end user, and expedite the arrangements for the delivery of fuel. When acting as a broker, we are paid a commission by the supplier.

We purchase our marine fuel from suppliers worldwide. We enter into derivative contracts in order to mitigate the risk of market price fluctuations, and to offer our customers fuel pricing alternatives to meet their needs. Our cost of fuel is generally tied to spot pricing, market-based formulas or is government controlled. We are usually extended unsecured trade credit from our suppliers for our fuel purchases. However, certain suppliers require us to provide a letter of credit. We may prepay our fuel purchases to take advantage of financial discounts when limited by the amount of credit extended to us by suppliers, or as required to transact business in certain countries.

Because we typically arrange to have fuel delivered by our suppliers directly to our customers, inventory is maintained only for competitive reasons and at minimum operating levels. Inventory is primarily maintained at two locations and is hedged in an effort to protect us against price risk. We have arrangements with our suppliers and other third parties for the storage and delivery of fuel.

We utilize subcontractors to provide various services to customers, including fueling of vessels in port and at sea, and transportation of fuel and fuel products.

During each of the years presented in the accompanying consolidated statements of income, none of our marine customers accounted for more than 10% of total consolidated revenue.

Aviation Segment

We market fuel and related services to major commercial airlines, second and third-tier airlines, cargo carriers, regional and low cost carriers, corporate fleets, fractional operators, private aircraft, military fleets and to the United States and foreign governments. Our aviation related services include fuel management, price risk management, arranging ground handling and arranging and providing international trip planning, including flights plans, weather reports and overflight permits. With the acquisition of AVCARD in December 2007, we also offer a private label charge card to customers in the general aviation industry. We have developed an extensive network that enables us to provide aviation fuel and related services throughout most of the world under the following trade names: World Fuel, PetroServicios de Mexico, Tramp Oil, PetroServicios de Costa Rica, Baseops, Airdata and AVCARD.

In general, the aviation industry is capital intensive and highly leveraged. Recognizing the financial risks of the airline industry, fuel suppliers generally refrain from extending unsecured lines of credit to airlines and avoid doing business with certain airlines directly. Consequently, most carriers are required to post a cash collateralized letter of credit or prepay for fuel purchases. This negatively impacts the airlines’ working capital. We recognize that the extension of credit is a risk, but believe it is also a significant area of opportunity. Accordingly, we extend unsecured credit to most of our customers.

We purchase our aviation fuel from suppliers worldwide. Our cost of fuel is generally tied to market-based formulas or is government controlled. We are usually extended unsecured trade credit from our suppliers for our fuel purchases. However, certain suppliers require us to provide a letter of credit. We may prepay our fuel purchases to take advantage of financial discounts when limited by the amount of credit extended to us by suppliers, or as required to transact business in certain countries. We also enter into derivative contracts in order to mitigate the risk of market price fluctuations and to offer our customers fuel pricing alternatives to meet their needs.

Fuel is typically delivered into our customers’ aircraft or designated storage directly from our suppliers or from our fuel inventory. Inventory is held at multiple locations for competitive reasons, but we try to keep inventory levels at an operating minimum. Inventory is purchased at airport locations or shipped via pipelines. Inventory in pipelines is hedged in an effort to protect us against price risk. We have arrangements with our suppliers and other third parties for the storage and delivery of fuel. We engage in spot sales and contract sales. Spot sales are sales that do not involve continuing contractual obligations by our customers to purchase fuel from us, whereas contract sales are made pursuant to fuel purchase contracts with our customers who commit to purchasing specific volumes of fuel from us during the contract term.

We utilize subcontractors to provide various services to customers, including into-plane fueling at airports and transportation and storage of fuel and fuel products.

During each of the years presented in the accompanying consolidated statements of income, none of our aviation customers accounted for more than 10% of total consolidated revenue.

Land Segment

We market fuel and related services to petroleum distributors operating in the land transportation market. Our land related services include management services for the procurement of fuel, price risk management and financing. Most of our business is generated from our offices in California, Texas and Florida, which provide the appropriate network to enable us to provide land fuel and related services throughout most of the United States. We also have operations in Brazil and the United Kingdom.

In our land segment, we act as a reseller. When acting as a reseller, we contemporaneously purchase fuel from a supplier, mark it up and resell it to our customers through rack spot sales and contract sales. We primarily purchase our land fuel from suppliers throughout the United States. Our suppliers typically extend us unsecured trade credit for our fuel purchases. Our cost of fuel is generally tied to market-based formulas. We extend unsecured credit to most of our customers and offer them fuel-pricing alternatives through our price risk management services.

Fuel is typically delivered to our customers directly at designated tanker truck loading terminals commonly referred to as “racks.” These racks are owned and operated by our suppliers or third-party consortiums. We do not hold any inventory. We engage in rack spot sales and contract sales and supply derivative contracts. Rack spot sales are sales that do not involve continuing contractual obligations by our customers to purchase fuel from us. Contract sales are made pursuant to fuel purchase contracts with our customers who commit to purchasing specific volumes of fuel from us during the contract term. We also enter into derivative contracts to offer our customers fuel pricing alternatives to meet their needs.

During each of the years presented in the accompanying consolidated statements of income, none of our land customers accounted for more than 10% of total consolidated revenue.

Competitors

Our competitors within the highly fragmented world-wide downstream market of marine, aviation and land fuel are numerous, ranging from large multinational corporations, which have significantly greater capital resources, to relatively small and specialized firms. In addition to competing with fuel resellers, we also compete with the major oil producers that market fuel directly to the large commercial airlines, shipping companies and petroleum distributors operating in the land transportation market. We believe that our extensive market knowledge, world-wide presence, extension of credit and use of derivatives to provide fuel pricing alternatives give us the ability to compete in the market place.

Employees

As of February 20, 2008, we employed 916 people worldwide.

Regulation

The principal laws and regulations affecting our businesses are as follows:

Environmental Regulations. Our current and past activities are subject to substantial regulation by federal, state and local government agencies, inside and outside the United States, which enforce laws and regulations governing the transportation, sale, storage and disposal of fuel and the collection, transportation, processing, storage, use and disposal of hazardous substances and wastes, including waste oil and petroleum products. For example, U.S. Federal and state environmental laws applicable to us include statutes that: (i) allocate the cost of remedying contamination among specifically identified parties, and prevent future contamination; (ii) impose national ambient standards and, in some cases, emission standards, for air pollutants that present a risk to public health or welfare; (iii) govern the management, treatment, storage and disposal of hazardous wastes; and (iv) regulate the discharge of pollutants into waterways. International treaties also prohibit the discharge of petroleum products at sea. The penalties for violations of environmental laws include injunctive relief, recovery of damages for injury to air, water or property, and fines for non-compliance. See “Item 1A—Risk Factors,” above, and “Item 3—Legal Proceedings.”

Forward-Looking Statements

Certain statements made in this report and the information incorporated by reference in it, or made by us in other reports, filings with the SEC, press releases, teleconferences, industry conferences or otherwise, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” “plan,” or words or phrases of similar meaning.

Forward-looking statements are estimates and projections reflecting our best judgment and involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information.

Examples of forward-looking statements in this report include, but are not limited to, our expectations regarding our business strategy, business prospects, operating results, working capital, liquidity, capital expenditure requirements and future acquisitions. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the cost, terms and availability of fuel from suppliers, pricing levels, the timing and cost of capital expenditures, outcomes of pending litigation, competitive conditions, general economic conditions and synergies relating to acquisitions, joint ventures and alliances. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect.

Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:




our ability to collect accounts receivable;




changes in the market price of fuel;




changes in the political, economic or regulatory conditions in the markets in which we operate;




currency exchange fluctuations; failure of the fuel we sell to meet specifications;




our failure to effectively hedge certain financial risks associated with the use of derivatives;




non-performance of suppliers on their sale commitments and customers on their purchase commitments;




non-performance of third party service providers;




non-performance by counterparties or customers to derivatives contracts;




material disruptions in the availability or supply of fuel;




adverse conditions in the business segments in which our customers operate;




uninsured losses;




the impact of natural disasters;




our failure to comply with restrictions and covenants in our senior revolving credit facility (“Credit Facility”);




increases in interest rates;




decline in value and liquidity of cash equivalents and investments;




our ability to retain and attract senior management and other key employees;




our ability to manage growth;




our ability to integrate acquired businesses;




changes in U.S. or foreign tax laws;




increased levels of competition;




changes in credit terms extended to us from our suppliers;




our ability to successfully integrate/implement our enterprise integration project;




the outcome of litigation;




compliance or lack of compliance with various environmental and other applicable laws and regulations; and




other risks, including those described in “Item 1A—Risk Factors” and those described from time to time in our filings with the SEC.

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

CEO BACKGROUND

PAUL H. STEBBINS has served as our Chairman of the Board of Directors and Chief Executive Officer since July 2002. He has served as a director of World Fuel since June 1995, and served as President and Chief Operating Officer of World Fuel from August 2000 to July 2002. From January 1995 to August 2000, Mr. Stebbins served as President and Chief Operating Officer of World Fuel Services Americas, Inc. (formerly Trans-Tec Services, Inc.), our principal subsidiary engaged in the marine fuel services business. From September 1985 to December 1994, Mr. Stebbins was an officer, shareholder and director of Trans-Tec Services, Inc., a New York corporation, and its affiliated companies. In December 2006, Mr. Stebbins joined the board of directors, and serves on the audit and compensation committees, of First Solar, Inc., a NASDAQ company.

MICHAEL J. KASBAR has served as a director of World Fuel since June 1995 and as President and Chief Operating Officer since July 2002. From January 1995 to July 2002, he served as Chief Executive Officer of World Fuel Services Americas, Inc. From September 1985 to December 1994, Mr. Kasbar was an officer, shareholder and director of Trans-Tec Services, Inc. and its affiliated companies. Mr. Kasbar is the first cousin of Richard A. Kassar, a director of the Company.

KEN BAKSHI has served as a director of World Fuel since August 2002. Mr. Bakshi has been Chairman of the Board and Chief Executive Officer of Amala Inc, an organic skin care products company, since April 2008 and Vice Chairman of the Board of Row 2 Technologies, a software development firm he co-founded, since February 2006. From December 2002 to February 2006, he was employed by Row 2 as Chief Executive Officer. Since June 2003, he has been a managing partner of Trishul Capital Group LLC, and Trishul Advisory Group LLC, two privately-owned equity investment and consulting companies. From July 2000 to December 2002, he was employed as Executive Vice President and Chief Operating Officer of Vistaar, Inc., an incubator of business-to-business internet based marketplaces. From 1998 to 2000, Mr. Bakshi served as Senior Vice-President of Wyeth (formerly known as American Home Products Corp.), a NYSE company. Prior to 1998, Mr. Bakshi served in various capacities with American Home Products Corp and American Cyanamid Company, which was acquired by American Home Products in 1994.

JOACHIM HEEL has served as a director of World Fuel since May 2007. Mr. Heel has been Senior Vice-President, Storage Practice for Sun Microsystems since July 2007. Prior to that, Mr. Heel was Senior Vice-President, Global Sales and Service for Sun Microsystems from March 2006 to June 2007 and Senior Vice-President, OEM Business Unit from September 2005 through March 2006. From 1991 through August 2005, Mr. Heel held various positions with McKinsey & Company, a global management consulting partnership, becoming a partner with the firm in 1997. Mr. Heel serves as a director of Intrinsyc Software, Inc., a mobility software and services company listed on the Toronto Stock Exchange.

RICHARD A. KASSAR has been a director of World Fuel since August 2002. Mr. Kassar has been employed as Chief Executive Officer of Freshpet Company, a pet food company, since October 2006, and is currently a principal of Go7Brands, LLC, a brand management company, where he also serves as Senior Vice-President and Chief Financial Officer. From February 2002 to July 2006, Mr. Kassar was the Senior Vice President and Chief Financial Officer of The Meow Mix Company. From May 2001 to January 2002, he was self-employed as a consultant to venture capital firms, advising them primarily on the acquisition of consumer brands. From December 1999 to May 2001, Mr. Kassar was employed as Co-President and Chief Financial Officer of Global Household Brands. From 1986 to December 1999, he was employed by Chock Full O’Nuts in various positions, and most recently served as Senior Vice President and Chief Operating Officer. Mr. Kassar serves as a director and chairman of the audit committee of Velocity Express, Inc. and Vaughan Foods, Inc., both NASDAQ companies, and serves as a member of the compensation committee of Velocity Express, Inc. Mr. Kassar is the first cousin of Michael J. Kasbar, our President and Chief Operating Officer and a director of World Fuel.

MYLES KLEIN has served as a director of World Fuel since February 1995. Mr. Klein is a certified public accountant. From 1971 until 1985, Mr. Klein was a partner in the international accounting and auditing firm of Grant Thornton. Subsequent to 1985, Mr. Klein practiced as Myles Klein, P.A. or Klein & Barreto, P.A. until July 2006 when he sold his accounting practice to Klein, Mendez & Rothbard, LLC. He retains a one percent interest in that firm and continues to provide services to the practice on a part-time basis.

J. THOMAS PRESBY has served as a director of World Fuel since February 2003. Mr. Presby has used his business experience and professional qualifications to forge a second career of essentially full-time board service since he retired in 2002 as a partner in Deloitte Touche Tohmatsu. At Deloitte, Mr. Presby held numerous positions in the United States and abroad, including the posts of Deputy Chairman and Chief Operating Officer. Mr. Presby now serves as a director and chairman of the audit committee of American Eagle Outfitters, Inc., Tiffany & Co., and Invesco Ltd., each a NYSE company, and First Solar, Inc. and TurboChef Technologies, Inc., both NASDAQ companies. As Mr. Presby has no significant business activities other than board service, he is available full time to fulfill his board responsibilities. Mr. Presby is a certified public accountant and a holder of the NACD Certificate of Director Education.

STEPHEN K. RODDENBERRY has served as a director of World Fuel since June 2006. Mr. Roddenberry is a shareholder in the law firm of Akerman Senterfitt where he has been employed since 1988.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

We are engaged in the marketing and sale of marine, aviation and land fuel products and related services on a worldwide basis. In our marine segment, we offer fuel and related services to a broad base of maritime customers, including international container and tanker fleets and time-charter operators, as well as to the United States and foreign governments. In our aviation segment, we offer fuel and related services to major commercial airlines, second and third-tier airlines, cargo carriers, regional and low cost carriers, corporate fleets, fractional operators, private aircraft, military fleets and to the United States and foreign governments. In December 2007, we acquired AVCARD and the results of operations of this acquisition have been included in the aviation segment and our consolidated financial statements since December 1, 2007. AVCARD offers a private label charge card and sells aviation fuel and related services to the general aviation industry. In our land segment, we offer fuel and related services to petroleum distributors operating in the land transportation market. We compete by providing our customers value-added benefits including single-supplier convenience, competitive pricing, the availability of trade credit, price risk management, logistical support, fuel quality control and fuel procurement outsourcing.

Our revenue and cost of sales are significantly impacted by world oil prices as evidenced in part by our revenue and cost of sales increases year over year while our gross profit is not necessarily impacted by the change in world oil prices as our profitability is driven by gross profit per unit which is not directly correlated to the price of fuel. However, our gross profit can be impacted by significant rapid movements in fuel prices during any given financial period due to our inventory average costing methodology. Generally a significant rapid increase in fuel prices positively impacts gross profit during any given financial period, while decrease in fuel prices negatively impacts gross profit.

In our marine segment, we primarily purchase and resell fuel, and act as brokers for others. Profit from our marine segment is determined primarily by the volume and gross profit achieved on fuel resales and by the volume and commission rate of brokering business. In our aviation and land segments, we primarily purchase and resell fuel, and we do not act as brokers. Profit from our aviation and land segments is primarily determined by the volume and the gross profit achieved on fuel resales. Our profitability in our segments also depends on our operating expenses, which may be significantly affected to the extent that we are required to provide for potential bad debt.

We may experience decreases in future sales volume and margins as a result of deterioration in the world economy, transportation industry, natural disasters and continued conflicts and instability in the Middle East, Asia and Latin America, as well as potential future terrorist activities and possible military retaliation. In addition, because fuel costs represent a significant part of our customers’ operating expenses, volatile and/or high fuel prices can adversely affect our customers’ businesses, and consequently the demand for our services and our results of operations. See “Item 1A—Risk Factors” of this Form 10-K.

Reportable Segments

We have three reportable operating business segments: marine, aviation and land. Corporate expenses are allocated to the segments based on usage, where possible, or on other factors according to the nature of the activity. Financial information with respect to our business segments is provided in Note 10 to the accompanying consolidated financial statements included in this Form 10-K. We evaluate and manage our business segments using the performance measurement of income from operations.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to unbilled revenue and related costs of sales, bad debt, share-based payments, derivatives, goodwill and identifiable intangible assets, and certain accrued liabilities. We base our estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have identified the policies below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the accompanying consolidated financial statements included in this Form 10-K.

Revenue Recognition

Revenue from the sale of fuel is recognized when the sales price is fixed or determinable, collectibility is reasonably assured and title passes to the customer, which is when the delivery of fuel is made to our customer directly from the supplier or a third party subcontractor. Our fuel sales are generated as a fuel reseller as well as from on-hand inventory supply. When acting as a fuel reseller, we contemporaneously purchase fuel from the supplier, mark it up, and resell the fuel to the customer, generally taking delivery for purchased fuel at the same place and time as the delivery is made. We record the gross sale of the fuel as we generally take inventory risk, have latitude in establishing the sales price, have discretion in the supplier selection, maintain credit risk and are the primary obligor in the sales arrangement.

Revenue from fuel related services is recognized when services are performed, the sales price is fixed or determinable and collectibility is reasonably assured. We record the gross sale of fuel related services as we generally have latitude in establishing the sales price, have discretion in supplier selection, maintain credit risk and are the primary obligor in the sales arrangement.

Commission from fuel broker services is recognized when services are performed and collectibility is reasonably assured. When acting as a fuel broker, we are paid a commission by the supplier.

Revenue from charge card transactions is recognized at the time the purchase is made by the customer using the charge card. Revenue from charge card transactions is generated from processing fees.

Accounts Receivable and Allowance for Bad Debt

Credit extension, monitoring and collection are performed by each of our business segments. Each segment has a credit committee. The credit committees are responsible for approving credit limits above certain amounts, setting and maintaining credit standards, and managing the overall quality of the credit portfolio. We perform ongoing credit evaluations of our customers and adjust credit limits based upon a customer’s payment history and creditworthiness, as determined by our review of our customer’s credit information. We extend credit on an unsecured basis to most of our customers. Accounts receivable are deemed past due based on contractual terms agreed with our customers.

We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience with our customers, current market and industry conditions affecting our customers, and any specific customer collection issues that we have identified. Accounts receivable are reduced by an allowance for estimated credit losses.

If credit losses exceed established allowances, our results of operations and financial condition may be adversely affected. For additional information on the credit risks inherent in our business, see “Item 1A – Risk Factors” of this Form 10-K.

Share-Based Payment

We account for share-based payment awards on a fair value basis. Under fair value accounting, the grant-date fair value of the share-based payment is amortized as compensation expense, on a straight-line basis, over the vesting period for both graded and cliff vesting awards. Annual compensation expense for share-based payment is reduced by an expected forfeiture amount on outstanding share-based payment.

We use the Black-Scholes option pricing model to estimate the fair value of stock options and stock-settled stock appreciation rights (“SSARs”). The estimation of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. The expected term of the stock options and SSARs represents the estimated period of time from grant until exercise or conversion and is based on vesting schedules and expected post-vesting, exercise and employment termination behavior. Expected volatility is based on the historical volatility of our common stock over the period that is equivalent to the award’s expected life. Any adjustment to the historical volatility as an indicator of future volatility would be based on the impact to historical volatility of significant non-recurring events that would not be expected in the future. Risk-free interest rates are based on the U.S. Treasury yield curve at the time of grant for the period that is equivalent to the award’s expected life. Dividend yields are based on the historical dividends of World Fuel over the period that is equivalent to the award’s expected life, as adjusted for stock splits.

The estimated fair value of common stock, restricted stock and restricted stock units is based on the grant-date market value of our common stock, as defined in the respective plans under which they were issued.

Derivatives

We enter into derivative contracts in order to mitigate the risk of market price fluctuations in marine, aviation and land fuel, and to offer our customers fuel pricing alternatives to meet their needs. We also enter into derivatives in order to mitigate the risk of fluctuation in interest rates and foreign currency exchange rates. All derivatives are recognized at estimated fair market value based on quoted market prices or available market information. If the derivative does not qualify as a hedge under Statement of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” or is not designated as a hedge, changes in the fair market value of the derivative are recognized as a component of cost of sale in the statement of income. Derivatives which qualify for hedge accounting may be designated as either a fair value or cash flow hedge. For our fair value hedges, changes in the fair market value of the hedge and the hedged item are recognized in the same line item as a component of either revenue or cost of sales in the statement of income. For our cash flow hedges, the effective portion of the changes in the fair market value of the hedge is recognized as a component of other comprehensive income in the shareholders’ equity section of the balance sheet, while the ineffective portion of the changes in the fair market value of the hedge is recognized as a component of interest expense in the statement of income. Cash flows for our hedging instruments used in our hedges are classified in the same category as the cash flow from the hedged items. If for any reason hedge accounting is discontinued, then any cash flows subsequent to the date of discontinuance shall be classified consistent with the nature of the instrument.

To qualify for hedge accounting, as either a fair value or cash flow hedge, the hedging relationship between the hedging instruments and hedged items must be highly effective over an extended period of time in achieving the offset of changes in fair values or cash flows attributable to the hedged risk at the inception of the hedge. We use a regression analysis based on historical spot prices in assessing the qualification for our fair value hedges. However, our measurement of hedge ineffectiveness for inventory hedges utilizes spot prices for the hedged item (inventory) and forward or future prices for the hedge instrument. Therefore, the excluded component (forward or futures prices) in assessing hedge qualification, along with ineffectiveness, is included as a component of cost of sales in earnings. Adjustment to the carrying amounts of hedged items is discontinued in instances where the related fair value hedging instrument becomes ineffective and any previously recorded fair market value changes are not adjusted until the fuel is sold.

For additional information on derivatives, see “Item 7A – Quantitative and Qualitative Disclosures About Market Risk” of this Form 10-K.

Goodwill and Identifiable Intangible Assets

Goodwill represents our cost in excess of the estimated fair value of net assets, including identifiable intangible assets, of acquired companies and the joint venture interest in PAFCO. Goodwill is not subject to periodic amortization; instead, it is reviewed annually at year-end (or more frequently under certain circumstances) for impairment. The initial step of the goodwill impairment test compares the estimated fair value of a reporting unit, which is the same as our reporting segments, with its carrying amount, including goodwill. The fair value of our reporting segment is estimated using discounted cash flow and market capitalization methodologies.

In connection with our acquisitions, we recorded identifiable intangible assets existing at the date of the acquisitions for customer, charge card holder and merchant relationships, non-compete agreements and trademark/tradename. Our identifiable intangible assets are amortized over their useful lives, which are estimated as follows: customer relationships—ranging from 2 to 7 years; charge card holder relationships—20 years; charge card merchant relationships—15 years; non-compete agreements—1 to 3 years; and trademark/tradename—indef inite. Indentifiable intangible assets are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Results of Operations

2007 compared to 2006

Revenue. Our revenue for 2007 was $13.7 billion, an increase of $2.9 billion, or 27.3%, as compared to 2006.

Our marine segment contributed $7.7 billion in revenue for 2007, an increase of $1.9 billion, or 32.5%, as compared to 2006. Of the total increase in marine segment revenue, $1.1 billion was due to an increase in the average price per metric ton sold as a result of higher world oil prices in 2007. The remaining increase of $787.9 million was due to increased sales volume as a result of additional sales to both new and existing customers.

Our aviation segment contributed $5.5 billion in revenue for 2007, an increase of $881.5 million, or 19.2%, over 2006. Of the total increase in aviation segment revenue, $467.0 million was due to increased sales volume. The increase in aviation segment sales volume was primarily due to additional sales to both new and existing customers and, to a lesser extent, sales volume from the AVCARD acquisition in December 2007. The remaining increase of $414.5 million was primarily due to an increase in the average price per gallon sold as a result of higher world oil prices in 2007 and to, a small degree, increased revenue related to aviation services.

Our land segment contributed $602.9 million in revenue for 2007, an increase of $182.2 million, or 43.3%, as compared to 2006. Of the total increase in land segment revenue, $139.4 million was due to increased sales volume to both new and existing customers and $42.8 million due to an increase in the average price per gallon sold.

Gross Profit. Our gross profit for 2007 was $245.3 million, an increase of $31.2 million, or 14.6%, as compared to 2006.

Our marine segment gross profit for 2007 was $114.5 million, an increase of $13.3 million, or 13.2%, as compared to 2006. Contributing to the total increase in marine segment gross profit was approximately $12.5 million in increased sales volume and $0.8 million in increased gross profit per metric ton sold.

Our aviation segment gross profit for 2007 was $122.8 million, an increase of $15.9 million, or 14.9%, as compared to 2006. Contributing to the total increase was $10.9 million in increased sales volume and $5.0 million in higher gross profit per gallon sold and increased gross profit related to aviation services.

Our land segment gross profit for 2007 was approximately $8.0 million, an increase of approximately $1.9 million, or 32.3%, as compared to 2006. The increase in land segment gross profit was primarily due to increased sales volume.

Of the total increase in operating expenses, $11.8 million was related to compensation and employee benefits and $13.7 million was related to general and administrative expenses. Partially offsetting these increases was a reduction of $2.0 million in provision for bad debt and the $1.5 million in executive severance costs incurred during 2006. The increase in compensation and employee benefits was primarily due to 2007 new hires to support our continued growing global business and the full year effect on compensation and employee benefits relating to 2006 new hires, partially offset by a decrease in incentive compensation. Included in general and administrative expenses for 2007 was an impairment charge of $2.4 million during the fourth of 2007 for internally developed computer software costs related to an aviation project. The remaining increase in general and administrative expenses of $11.3 million was primarily attributable to the following expenses: systems development, which included costs related to our enterprise integration project, professional and consulting fees, business travel, depreciation and amortization, office rent and telecommunication. The decrease in provision for bad debt was primarily due to an overall improved quality of our receivable portfolio during 2007 as compared to 2006, primarily in the aviation and land segment.

Income from Operations. Our income from operations for 2007 was $85.9 million, an increase of $9.2 million, or 12.1%, as compared to 2006.

The marine segment earned $50.8 million in income from operations for 2007, an increase of $6.6 million, or 15.0%, as compared to 2006. This increase resulted from $13.3 million in higher gross profit, offset by increased operating expenses of $6.7 million. The increase in marine segment operating expenses, which includes an increase in allocated corporate expenses, was attributable to increases in compensation and employee benefits, provision for bad debt and general and administrative expenses.

The aviation segment income from operations was $60.8 million for 2007, an increase of $4.1 million, or 7.3%, as compared to 2006. This increase resulted from $15.9 million in higher gross profit, offset by increased operating expenses of $11.8 million. The increase in aviation segment operating expenses, which includes an increase in allocated corporate expenses, was attributable to increases in compensation and employee benefits and general and administrative expenses, partially offset by a decrease in provision for bad debt.

The land segment income from operations was $1.2 million for 2007, an increase of $0.1 million, or 8.7%, as compared to 2006. This increase resulted from $1.9 million in higher gross profit, offset by increased operating expenses of $1.8 million. The increase in land segment operating expenses, which includes an increase in allocated corporate expenses, was attributable to increases in compensation and employee benefits and general and administrative expenses, partially offset by a decrease in provision for bad debt.

Corporate overhead costs not charged to the business segments was $27.0 million for 2007, an increase of $1.6 million, or 6.4% as compared to 2006. The increase in corporate overhead costs was attributable to increases in compensation and employee benefits and general and administrative expenses.

Other Expense and Income, net. In 2007, we had other income, net, of $0.7 million, a decrease of approximately $4.1 million, as compared to other income, net, of $4.8 million for 2006. The decrease in other income, net, was primarily due to a $1.9 million investment impairment charge resulting from the write-down of our commercial paper investment, foreign currency exchange losses reported for 2007 as compared to foreign currency exchange gains reported for 2006 and a decrease in interest income due to lower interest rates and lower average invested balances. Partially offsetting these decreases was lower interest expense as a result of the capitalization of interest expenses of approximately $1.0 million related to our enterprise integration project.

Taxes. For 2007, our effective tax rate was 24.5% and our income tax provision was $21.2 million, as compared to an effective tax rate of 21.3% and an income tax provision of $17.4 million for 2006. The higher effective tax rate for 2007 resulted primarily from additional income tax expense recorded in connection with the new accounting guidance of Financial Accounting Standard Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”) in 2007 as well as fluctuations in the actual results achieved by our subsidiaries in tax jurisdictions with different tax rates.

Net Income and Diluted Earnings per Share. Net income for 2007 was $64.8 million, an increase of $0.8 million, or 1.3%, as compared to 2006. Diluted earnings per share for 2007 was $2.23 per share, an increase of $0.02 per share, or 0.9%, as compared to 2006.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Results of Operations

The results of operations for the three months ended March 31, 2007 do not include the results of AVCARD as the acquisition of AVCARD was not completed until December 2007.

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

Revenue. Our revenue for the first quarter of 2008 was $4.5 billion, an increase of $1.8 billion, or 66.2%, as compared to the first quarter of 2007.

Our marine segment contributed $2.4 billion in revenue for the first quarter of 2008, an increase of $940.7 million, or 63.3%, as compared to the first quarter of 2007. Of the total increase in marine segment revenue, $889.8 million was due to an increase in the average price per metric ton sold as a result of higher world oil prices in the first quarter of 2008. The remaining increase of $50.9 million was due to increased sales volume as a result of additional sales to both new and existing customers.

Our aviation segment contributed $1.9 billion in revenue for the first quarter of 2008, an increase of $772.3 million, or 70.2%, as compared to the first quarter of 2007. Of the total increase in aviation segment revenue, $630.9 million was primarily due to an increase in the average price per gallon sold as a result of higher world oil prices in the first quarter of 2008 as well as increased revenue related to aviation services. The remaining increase of $141.4 million was due to increased sales volume primarily due to additional sales to both new and existing customers as well as sales volume from the AVCARD acquisition in December 2007.

Our land segment contributed $191.4 million in revenue for the first quarter of 2008, an increase of $76.3 million, or 66.3%, as compared to the first quarter of 2007. Of the total increase in land segment revenue, $56.3 million was due to an increase in the average price per gallon sold and $20.0 million was due to increased sales volume to both new and existing customers.

Gross Profit. Our gross profit for the first quarter of 2008 was $73.8 million, an increase of $22.6 million, or 44.2%, as compared to the first quarter of 2007.

Our marine segment gross profit for the first quarter of 2008 was $36.9 million, an increase of $7.4 million, or 24.9%, as compared to the first quarter of 2007. Contributing to the total increase in marine segment gross profit was $6.6 million in increased gross profit per metric ton sold and $0.8 million in increased sales volume.

Our aviation segment gross profit for the first quarter of 2008 was $35.1 million, an increase of $15.3 million, or 77.5%, as compared to the first quarter of 2007. Contributing to the total increase was $12.8 million in higher gross profit per gallon sold as compared to the prior year period which experienced low gross profit per gallon because of a decline in jet fuel prices in the early part of the first quarter, as well as increased gross profit related to aviation services and $2.5 million in increased sales volume.

Our land segment gross profit for the first quarter of 2008 was $1.8 million, a decrease of $38 thousand, or 2.1%, as compared to the first quarter of 2007. The decrease in land segment gross profit resulted from lower gross profit per gallon sold.

Operating Expenses. Total operating expenses for the first quarter of 2008 were $51.5 million, an increase of $17.3 million, or 50.5%, as compared to the first quarter of 2007.

Of the total increase in operating expenses, $6.8 million was related to compensation and employee benefits, $2.3 million was related to provision for bad debt and $8.2 million was related to general and administrative expenses. The increase in compensation and employee benefits was primarily due to 2007 new hires to support our continued growing global business and an increase in incentive compensation. The increase in provision for bad debt was primarily due to an increase in fuel prices during the first quarter of 2008 and the effect of a reduction in provision for bad debts during the first quarter of 2007. The increase in general and administrative expenses of $8.2 million was primarily attributable to the following expenses: systems development, which included costs related to our enterprise integration project, professional and consulting fees, depreciation and amortization, office rent, telecommunication and business travel.

Income from Operations. Our income from operations for the first quarter of 2008 was $22.3 million, an increase of $5.4 million, or 31.7%, as compared to the first quarter of 2007.

Our marine segment earned $17.7 million in income from operations for the first quarter of 2008, an increase of $2.7 million, or 18.1%, as compared to the first quarter of 2007. This increase resulted from $7.4 million in higher gross profit, offset by increased operating expenses of $4.7 million. The increase in marine segment operating expenses, which includes an increase in allocated corporate expenses, was attributable to increases in compensation and employee benefits, provision for bad debts and general and administrative expenses.

Our aviation segment income from operations was $12.4 million for the first quarter of 2008, an increase of $4.7 million, or 60.5%, as compared to the first quarter of 2007. This increase resulted from $15.3 million in higher gross profit, offset by increased operating expenses of approximately $10.6 million. The increase in aviation segment operating expenses, which includes an increase in allocated corporate expenses, was attributable to increases in compensation and employee benefits, provision for bad debt and general and administrative expenses.

Our land segment generated a loss from operations of $0.7 million for the first quarter of 2008, a decrease of $1.2 million as compared to the first quarter of 2007. This decrease resulted from increased operating expenses primarily related to additional strategic investment in the segment which was attributable to increases in compensation and employee benefits and general and administrative expenses.

Corporate overhead costs not charged to the business segments were $7.0 million for the first quarter of 2008, an increase of $0.8 million, or 13.4%, as compared to the first quarter of 2007. The increase in corporate overhead costs was attributable to increases in general and administrative expenses, offset by decreases in compensation and employee benefits.

Other Income and Expense, net. For the first quarter of 2008, we had other expense, net of $2.2 million compared to other income, net of $0.8 million for the first quarter of 2007. This $3.0 million change was primarily due to increased interest expense on our outstanding borrowings under our Credit Facility, a decrease in interest income during the first quarter of 2008 and increased foreign exchange losses during the first quarter of 2008.

Taxes. For the first quarter of 2008, our effective tax rate was 20.9% and our income tax provision was $4.2 million, as compared to an effective tax rate of 16.0% and an income tax provision of $2.8 million for the first quarter of 2007. The higher effective tax rate for the first quarter of 2008 resulted primarily from fluctuations in the actual results achieved by our subsidiaries in tax jurisdictions with different tax rates.

Net Income and Diluted Earnings per Share. Net income for the first quarter of 2008 was $15.8 million, an increase of approximately $1.0 million, or 6.2%, as compared to the first quarter of 2007. Diluted earnings per share for the first quarter of 2008 was $0.55 per share, an increase of $0.04 per share, or 7.8%, as compared to the first quarter of 2007.

Liquidity and Capital Resources

We had $76.0 million of cash and cash equivalents as of March 31, 2008, as compared to $36.2 million of cash and cash equivalents and $10.0 million of restricted cash as of December 31, 2007. Additionally, at March 31, 2008 and December 31, 2007, our short-term investments consisted of $8.1 million of commercial paper with a par value of $10.0 million, which was investment grade when purchased. On the maturity date of the investment in August 2007, the issuer of the commercial paper defaulted on its repayment obligation. The commercial paper is no longer highly liquid and therefore a readily determinable fair market value of the investment is not available. We have estimated the fair market value of the commercial paper based principally on the results of a valuation performed by a third party. The valuation considered (i) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (ii) individual valuation estimates of the underlying collateral using multiple indicators of value; and (iii) the probabilities of repayment under various liquidation scenarios. The results of the valuation yielded a range of estimated fair market values of our commercial paper investment from approximately $6.1 million to approximately $10.0 million. The estimated fair market value of our commercial paper of $8.1 million at March 31, 2008 could change significantly based on future market conditions and the ultimate settlement of our commercial paper could be for amounts materially different from our current estimate of fair market value. As a result, additional impairment charges may be required in the future. The commercial paper is classified as a short-term investment as of March 31, 2008 based on information available to us that suggests that it is likely there will be a cash settlement of the commercial paper available to us within one year. Changes in facts and circumstances in future periods could lead to changes in the expected settlement date of the commercial paper balances. Accordingly, there may be changes in our classification of such balances from short-term to long-term.

Our primary use of cash, cash equivalents and short-term investments is to fund receivables and the purchase of inventories. We are usually extended unsecured trade credit from our suppliers for our fuel purchases; however, certain suppliers require us to provide a letter of credit. Our ability to fund fuel purchases, obtain trade credit from our suppliers, and provide letters of credit is critical to our business. Increases in oil prices can negatively affect liquidity by increasing the amount of cash needed to fund fuel purchases as well as reducing the amount of fuel which we can purchase on an unsecured credit basis from our suppliers. Additionally, we use cash and cash equivalents as well as draw on our Credit Facility to fund acquisitions. In March, we signed a definitive agreement (“Purchase Agreement”) to acquire certain select assets and assume certain liabilities of Texor Petroleum Company, Inc. for a purchase price of approximately $104.0 million, subject to adjustment based on the net asset value of the acquired assets. The purchase price will be principally funded through our Credit Facility and is expected to close within 75 days from the date the Purchase Agreement was signed.

Our business is funded through cash generated from operations and borrowings under our Credit Facility. Outstanding borrowings under our Credit Facility, our cash and cash equivalents and short-term investments fluctuate primarily based on operating cash flow, most significantly, the timing of receipts from our customers and payments to our suppliers. Our Credit Facility permits borrowings of up to $475.0 million with a sublimit of $100.0 million for the issuance of letters of credit and provides us the right to request increases in available borrowings up to an additional $75.0 million, subject to the satisfaction of certain conditions. As of March 31, 2008, we had $80.0 million in outstanding borrowings and $58.4 million in issued letters of credit.

Higher interest rates can have a negative effect on our liquidity due to higher costs of borrowing under our Credit Facility. As of March 31, 2008, we had one interest rate protection arrangement in the form of an interest rate swap in the amount of $10.0 million to reduce our exposure to increases in interest rates. The interest rate protection arrangement expired on April 15, 2008. As of March 31, 2008, our weighted average interest rate on our borrowings under the Credit Facility, adjusting for the interest rate swap, was 3.8% per annum.

Our Credit Facility contains certain operating and financial covenants with which we are required to comply. Our failure to comply with the operating and financial covenants contained in our Credit Facility could result in an event of default. An event of default, if not cured or waived, would permit acceleration of any outstanding indebtedness under the Credit Facility, trigger cross-defaults under other agreements to which we are a party, and impair our ability to obtain working capital advances and letters of credit, which would have a material adverse effect on our business, financial condition and results of operations. As of March 31, 2008, we believe we were in compliance with all covenants under our Credit Facility.

CONF CALL

Francis Shea

Good evening, everyone. And welcome to the World Fuel Services fourth quarter conference call. I am Frank Shea, Executive Vice President and Chief Risk and Administrative Officer, and as evident, I am doing the introductions on this evening’s call.

Today’s call is also available via webcast. To access this webcast or future webcasts, please visit our website and click on the webcast icon. With us on the call today are, Paul Stebbins, Chairman and Chief Executive Officer; Michael Kasbar, President and Chief Operating Officer; Ira Birns, Executive Vice President and Chief Financial Officer; and Paul Nobel, Senior Vice President and Chief Accounting Officer.

By now, you should have all received a copy of our earnings release. If not, you can access our release on our website.

Before we get started, I would like to review World Fuel’s Safe Harbor statement. Some of the comments to be made on this evening’s call may include forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These statements involve risks and uncertainties that could cause actual results or facts to differ materially from such statements. Detailed information about these risks is contained in the company’s SEC filings, which are available on the company’s website or from the SEC.

We will begin with several minutes of prepared remarks which will then be followed by a question-and-answer period.

At this time, I would like to introduce our Chairman and Chief Executive Officer, Paul Stebbins.

Paul H. Stebbins

Thank you, Frank. Good afternoon and thank you all for joining us. Today we announced earnings of $18.1 million or $0.63 per diluted share for the fourth quarter of fiscal 2007. These numbers include a $1.7 million after-tax impairment charge related to the write-down of capitalized software costs from a business we acquired in 1998.

Overall, we delivered solid earnings performance in Q4, and our return on equity, excluding the software write-down, was 16.8% [inaudible – break in audio] an extremely volatile operating environment. We continued to deliver robust underlying growth across all segments.

In our Aviation segment, we were pleased to announce the acquisition of AVCARD, which offers a private label charge card and sells aviation fuel and related services to the general aviation industry.

AVCARD’s robust offering has been an excellent strategic complement to our core business. They came with great management depth, and we have already begun to leverage their expertise within our existing organization.

This acquisition has generated considerable interest in the aviation market, and we have embarked on a number of successful joint sales initiatives with the AVCARD team. We could not be happier with the AVCARD acquisition and its positive impact on our business.

We are also pleased to report that the overall aviation industry continues to prosper. Boeing set a record for plane orders in 2007 with over 1,400 commercial jet orders and deliveries of over 440 aircraft. Airbus had over 1,200 orders and delivered over 400 planes. Our own core aviation business remains strong in the quarter, with gross profit up sharply on a sequential and year-over-year basis.

Furthermore, our self-supply model continued to drive value as we benefited from increasing prices throughout Q4. Looking forward, IATA expects airline industry profits in 2008 to be around $5.5 billion, down from their previous estimate of $7.8 billion. This decline is directly attributable to the rising cost of jet fuel which increased 20% in the quarter and is expected to increase some $150 billion in 2008 and represent 30% of airline operating costs.

This market backdrop only serves to highlight the strategic importance of fuel and presents continued opportunity to expand our services across a broad spectrum of customer groups, including business aviation, cargo, passenger, charter and military service.

Our Marine segment delivered great results in Q4, posting an increase in volume and record gross profit. Volume and operating income were also up quarter-to-quarter and year-over-year.

It is clear that our strategy of deeply analyzing supply markets and promoting intense customer focus have paid dividends. Our worldwide Marine leadership team has done a great job, and we are well-positioned for 2008.

Recent industry trends favor our Marine business model. During 2007, average bunker prices rose 20% and the customers of large container liners are beginning to accept that bunker charges need to be separated from freight rates. The idea of imposing a floating fuel surcharge is being adopted by some major players in the industry, which is a significant departure from the traditional fixed term surcharge.

One industry leader, Maersk Line has announced that it will introduce a bunker adjustment factor for its fleet. The move to bifurcate fuel and freight charges is a development which highlights the importance of fuel costs to large fleets and bodes well for our services, particularly in the area of price risk management.

On a more macro level, the Marine space has demonstrated resilience in the face of uncertain economic outlook. Tanker rates rocketed in December with BLCC rates hitting levels not seen since November of 2004. The increased demand forecast for 2008 is up for tankers across the spectrum of BLCCs, Suezmax and Aframax class vessels.

On the container side of the market, demand is forecast to remain relatively healthy with projections of 9.7% growth in 2008 and 9.8% growth in 2009. On the supply side, the container fleet grew 11.6% in 2007, and growth is projected at 13.4% in 2008 and 12.7% in 2009. This will create some supply/demand imbalances as capacity expansion is expected to outstrip demand growth by some 3.7% in 2008 and close to 3% in 2009.

In the dry bulk market, the year ended on a soft note with rates off from record highs seen in November. In the meantime, total fleet capacity is projected to grow at just over 10% in 2008.

Overall we feel good about the shipping market. The industry has enjoyed several very strong years and is well-positioned to weather potential downturns in the global economy. It is it worth noting that historically, we have tended to benefit in down markets as oil companies grow more conservative on credit and customers are pressured to cut costs.

In our Land segment, we were pleased to see volume growth and expect profitability to improve as our investment in people to populate the organization begins to stabilize and the new technology platform enables us to scale.

This call would not be complete without some mention of our much discussed systems implementation project. We were pleased to report that our ERP system went live early in the first quarter and it was a successful launch. The enormity of this undertaking cannot be overstated, and our success in delivering this system is an important milestone for the company.

We were grateful to our global team, whose effort and commitment were truly extraordinary. They can share in the pride of delivering a robust platform for scaling our global business. With this major project behind us, we look forward to having these dedicated members of the World Fuel team return full time to their normal duties and focus on the many opportunities we see in the market.

2007 was a challenging but transformational year for World Fuel. We saw an unprecedented level of earnings volatility associated with our successful self-supply model, which was driven primarily by significant price volatility.

We had a number of key people consumed with the challenge of putting in a global ERP platform, which distracted them from the core business. The meltdown in the financial markets contributed to a difficult operating environment and a $1.9 million impairment charge against a routine two week investment of A1/P1 commercial paper.

In spite of all this, we’ve delivered robust fundamental growth in volume, gross profit and completed a significant strategic acquisition. Notwithstanding the challenges of 2007, we believe the company’s fundamentals and global market position are stronger than ever and we look forward to 2008.

We would like to thank you, our shareholders, for your continued support and we will now turn the call over to Ira Birns for a discussion of the financials.

Ira M. Birns

Thank you, Paul and good evening everyone. Revenues for the fourth quarter was $4.1 billion, up 15% sequentially and up 58% compared to the fourth quarter of last year. Our Marine segment revenues were $2.3 billion up 17% sequentially and 63% year-over-year.

The Aviation segment generated revenues of $1.6 billion, up 12% sequentially and up 52% from last year’s fourth quarter. And finally, our Land segment grew to $181 million, up 18% sequentially and 60% from last year’s fourth quarter.

These increases in revenue were significantly impacted by the sharp increase in fuel prices over the course of 2007, with the most pronounced impact occurring during the fourth quarter.

Before I review our results by segment, I would like to point out that our Aviation results include AVCARD’s results of operations from December 1 through year-end. Our Aviation segment sold 601 million gallons of fuel during the fourth quarter of 2007, down 2% sequentially, but up 14% compared to the fourth quarter of last year.

Our Marine segment’s total business activity was 7.1 million metric tons, up 3% sequentially and year-over-year. Fuel reselling activities constituted 75% of total Marine business activity in the quarter, consistent with the third quarter.

Our Land segment continues to grow, selling 74 million gallons during the fourth quarter, up 6% sequentially and up over 24% compared to the fourth quarter of last year.

Gross profit for the fourth quarter was $73.8 million, an increase of $11.6 million or 19% sequentially and $16.1 million or 28% compared to the same quarter a year ago.

Our Aviation segment contributed a record $39.1 million in gross profit, an increase of $5.8 million or 18% sequentially, and $10.5 million or 37% over the fourth quarter of 2006.

Similar to the second quarter of 2007, the sharp rise in jet fuel prices during the quarter resulted in an imbalance between the average cost of our jet fuel inventory and a higher market price. This imbalance was the principal driver of the sequential increase in gross profit from the third quarter.

Our self-supply model’s jet fuel inventory position was approximately 33 million gallons at year end, down 7 million gallons when compared to the third quarter. The dollar value of our related jet fuel inventory decreased to approximately $86 million, from $88 million in the prior quarter.

While gallons of inventory dropped 17% sequentially, the dollar value of our jet fuel inventory only dropped 2% due to the impact of rising fuel prices. For the record, jet fuel market prices climbed nearly 20% during the quarter, from approximately $2.28 to $2.67 per gallon.

Our Marine segment also delivered solid results, generating record gross profit of $32.8 million, an increase of $5.9 million or 22% sequentially, and $5.4 million or 20% year-over-year, benefiting from significant price volatility during the fourth quarter.

Our Land segment delivered gross profit of $2 million, a decrease of 8% sequentially, but an increase of 10% from the fourth quarter of 2006. Operating expenses for the fourth quarter were $49.3 million, an increase of $9.3 million or 23% sequentially, and $10.4 million or 27% year-over-year. Of the sequential increase, $2.4 million was related to compensation and $7 million was due to an increase in general and administrative expenses.

With respect to compensation, the sequential increase included the impact of newly hired employees in the third and fourth quarters of 2007. As we have stated over the course of 2007, we have been consciously investing in our infrastructure by building our global team to support growth initiatives in all three segments of our businesses throughout the world.

We have added over 100 employees to our global team in 2007, excluding the impact of the recent AVCARD acquisition, and we believe the heavy lifting is now principally behind us. While we will always be seeking out talent to further strengthen the organization, we expect the pace of head count growth to slow over the course of 2008.

Our bad debt expense was $1.3 million, down $1 million from last year’s fourth quarter, but consistent with the third quarter. The sequential increase in general and administrative expenses includes the impact of the $2.4 million non-cash impairment charge relating to the write down of capitalized software development costs associated with an aviation flight planning company, which we acquired in 1998.

The increase also includes the impact of $1.1 million of depreciation related to software used in the data conversion process related to our ERP project, which was all booked in the fourth quarter, as well as one month of AVCARD operating expenses.

Unallocated corporate overhead was $8.1 million, an increase of approximately $600,000 from the corresponding quarter a year-ago and up approximately $1.6 million sequentially. Regarding our ERP project, which Paul mentioned earlier, we incurred an aggregate cost of $5.7 million during the fourth quarter, of which $2.9 million was capitalized and $2.8 million was expensed.

Both amounts are only slightly above the amounts estimated on our last earnings call. For the full year 2007, we capitalized $10.5 million of project costs and expensed $7.7 million. As we will incur some stabilization-related expenses in the first and second quarters of 2008, in addition to beginning to depreciate the capitalized project costs, our IP related cost will actually increase in the first and second quarters, before decreasing in the second half of the year.

Also, please note that costs related to employees who have been directly associated with the development of the project were capitalized in 2007, who will once again impact compensation expenses beginning in the first quarter.

I understand I just covered a lot of pluses and minuses. So I’m going to try to help you model our operating expenses going forward. I would assume overall operating expenses, including AVCARD, of approximately $46 million to $50 million in the first quarter and full year operating expenses of approximately $185 million to $200 million for the full year 2008.

Income from operations for the fourth quarter was $24.6 million, an increase of 21% sequentially and 43% from the fourth quarter of last year, excluding the impact of the $2.4 million impairment charge recorded in the fourth quarter.

Income from operations for our Aviation segment was $18.1 million, an increase of 13% sequentially and an increase of 40% when compared to last year’s fourth quarter, once again, after excluding the impact of the $2.4 million impairment charge.

Our Marine segment’s income from operations was $14.6 million for the quarter, an increase of 44% sequentially and 24% year-over-year. Our Land segment had slight loss from operations of under $100,000, consistent with the loss in the fourth quarter of last year but down from a $400,000 profit in the third quarter, due in part to higher compensation related to new key employees, who are driving global business growth strategies.

The company had other income net of $600,000 for the fourth quarter, compared to other income net of $2.3 million for the same quarter a year ago. This $1.7 million change was primarily due to a decrease in interest income due to lower average cash balances and lower interest rates on our investments when compared to the fourth quarter of last year.

Heading into 2008, we expect to incur net interest expense, principally related to capital employed to purchase AVCARD and to support increased working capital requirements driven by higher fuel prices. For modeling purposes, I would assume interest expense of approximately $1.5 million for the first quarter.

Sequentially, other income net increased by $2.8 million, primarily relating to the $1.9 million impairment charge recognized in the third quarter related to a commercial paper investment. Using methodology consistent with the third quarter, we estimated the market value of this investment at $8.1 million at the end of the fourth quarter, consistent with our valuation at the end of September.

Therefore, no further write-down was necessary in the fourth quarter. This information remains subject to change, and depending on the ultimate resolution in this matter, additional impairment charges may be required in the future in connection with this investment.

As discussed last quarter, we have no other similar investments and it is also worth noting that we also have no auction rate security investments, which are no longer permitted under our short-term investment policy.

The company’s effective tax rate for the fourth quarter was 27.4%, as compared to 17.5% for the fourth quarter of 2006. The higher effective tax rate resulted from additional provision related to FIN 48 as well as a shift in the mix of the results of operations derived from our subsidiaries in tax jurisdictions with higher tax rates, principally the United States.

For modeling purposes, you can use an estimated effective tax rate for the first quarter and the full year of 2008 of 23% to 27%. While we are on the topic of accounting pronouncements, as you may know, in September 2007, the Financial Accounting Standards Board issued FAS 157, which focuses on the fair value measurement of assets and liabilities.

We adopted FAS 157 in January, and as a result, recorded a cumulative adjustment of retained earnings of $2.8 million pre-tax, related to the deferred gains of derivative transactions. These transactions were entered into in 2007, but do not settle until 2008.

Accordingly, the related revenue in gross profit related to these transactions will not be recognized as income in 2008. Please be aware this accounting change can create some lumpiness in earnings going forward, as revenue and gross profit related to certain of our derivative transactions must now be recognized up front rather than over the life of a transaction.

The following statistics exclude the impact of the impairment charges booked in the third and fourth quarters.

Net income for the fourth quarter increased 22% sequentially and 15% year-over-year, and diluted earnings per share increased 22% sequentially and 15% over last year’s fourth quarter as well.

Return on equity was 16.8% for the fourth quarter, compared to 16.6% for the same quarter a year ago, and our return on assets for the fourth quarter was 4.8%, compared to 5.6% for the corresponding quarter last year.

At December 31, our cash, cash equivalents and short-term investments were $44 million, compared to approximately $143 million at September 30. Please be reminded that our quarter end cash position was impacted by the December acquisition of AVCARD, or approximately $55 million.

Despite the unusually sharp spike in oil prices in the fourth quarter, which rose from $81 at the end of the third quarter to $96 at year end, our net operating cash flow was only negative $51 million, and our liquidity position remains strong − a testament to the strength of our balance sheet, which remains a competitive advantage for us during this period of volatility and rising prices.

To further enhance our liquidity position, in December, we amended our existing credit agreement, more than doubling the size of the facility from $220 million to $475 million and extending the maturity date of this unsecured facility through December 2012.

This provides us with significant liquidity to support both organic growth initiatives and strategic investment opportunities. For the complete details regarding our amended and restated credit agreement, please refer to the Form 8-K that we filed on December 26, 2007.

DSO in the fourth quarter was 28 days, up one day from the third quarter, and our payable days outstanding were unchanged at 23 days. Inventory was $103 million, down $11 million from the third quarter, representing two days of sales, down one day from the third quarter.

Therefore, our overall cash conversion cycle remained unchanged quarter-over-quarter. Inventory days in our aviation self-supply model were five days, down two days from the third quarter.

In closing, Paul cited several challenges we faced in 2007. We are proud of several key accomplishments achieved during the year, which will pay dividends for years to come. We have significantly strengthened our team by filling several key positions within the company. We upgraded our systems capabilities, working very hard all year to prepare for the successful rollout of our new ERP platform at the start of 2008.

We acquired AVCARD, adding to our suite of service capabilities in our Aviation segment, and we finished the year with strong results in the fourth quarter. I would like to thank and congratulate my fellow employees for their contributions toward these accomplishments over the past year.

And on that note, I will turn the call back over to Paul Stebbins.

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